Blog

The Silver Separators: Financial Implications of Divorce After 60

The concept of marriage may need to hire a new P.R. rep. As new marriages among millennials have seen a steady drop over the years, established marriages are not lasting as long as they once were either. One group in particular where the divorce rate has spiked is seniors. The trending term applied to these newly liberated individuals is “Silver Separators.” While many are enjoying their newfound relationship freedom, there could be some not too pleasant financial consequences to this later in life uncoupling.

The International Longevity Centre compiles statistics on people 60 and over for a wide range of analysis. One extremely relevant finding they have uncovered is that between the years of 1990 and 2012, the divorce rate among seniors has skyrocketed by 85%. The current widespread acceptance of divorce is clearly a factor here, as seniors no longer feel that they have to endure a relationship they no longer want to merely for the sake of social conventions. The Baby Boomers (that’s 74.9 million Americans right now, aged 51 to 69) in particular have typically held the temperament that they ‘want what they want, when they want it,’ so it stands to reason that they especially would have fewer compulsions regarding divorce.

Once the initial relief of freeing oneself from an expired marriage begins to wear off, there are some concerns that will arise, primarily financial in nature. When it comes to the precious assets (that may have been held onto for a long time) that were once shared, who gets what exactly? Weighing in on the issue, the legal specialists at nolo.com explain “The market value of an asset isn’t always the only consideration when you’re making these decisions, because some assets will be more useful to you later in life than others.” With property obviously being the main shared asset of any couple, once a marriage is dissolved, neither party is usually that thrilled to relinquish this. Property represents not only the place where one resides, but the financial cushion potentially needed for down the road. There is the other factor of inheritance to consider as well; people want to make sure they have something to leave their children. If this asset is divided in divorce, what could this mean long term? Another alarming issue is the dissolving of one’s Final Salary Pension plan. With a secure retirement plan firmly in place, there is little cause for worry. When this plan is disrupted by divorce, an unbalancing of finances can occur. With a joint pension system in place, both married parties receive equal benefits; once this is broken up, the person with the substantially greater pension (historically, the man) will be fine while the other ex-spouse is left with a disproportionate amount to live off (from their significantly diminished own pension).

Luckily for the person receiving the smaller pension, there is something called a “pension sharing order,” which is a type of monetary “offsetting.” Here the greater pension is divided to account for the other party and a percentage is awarded to them. This is contingent on an amicable divorce of some nature, one where both spouses are seeking an equitable division of finances. Naturally if the divorce case involves contention and warring lawyers this may be harder to achieve.

Another method of offsetting can be utilized where the pensions remain untouched, but the larger assets are divided in a more even way. Here, for instance, the person with the weightier pension will opt to receive only a smaller percentage of the equity in a home, while the smaller pension recipient takes the remaining, higher percentage.

Yet another major concern in the silver divorce realm is that of healthcare and coverage. If you are 60 years of age, you have to wait an additional five years before you are covered by Medicare. In this interim, it clearly is necessary to make sure you have proper coverage. You may be entitled to COBRA if you are currently covered through your spouse’s insurance provider and are about to embark on a divorce (where you would subsequently lose that coverage). In regards to that five year gap, legalzoom.com states “COBRA will allow you to cover three of those years by paying the group rate premium, which may be less costly than purchasing your own policy.”

One of the main reasons why properly sorting through all these financial matters in a fair way is of tantamount importance is because trying to procure additional income in later years can be increasingly challenging. “Even in white-collar professions, working at certain jobs can be a lot less pleasant at age 70 than it was at 45.” says retirement reporter, Elizabeth O’Brien of marketwatch.com. An attempt to return to the workforce after retirement can prove to be extremely difficult for some; not only a physically demanding experience but one that can come up short in terms of salary desired or needed. Income derived from a new job should be supplemental, not your primary source of money.

Last, it is extremely important that you consult with a reputable attorney who specializes in divorce before proceeding with a divorce of your own. They will help you navigate the murky waters of senior separation and help ensure that you walk away with the financial stability that you are entitled to.

At the end of the day, a post 60 divorce may be the right option for you. The thing to keep in my in this scenario is that you need to be financially prepared. Then you will be able to truly enjoy your independence with confidence.